Venezuela: The truth below

Sep 1, 2012

No matter the outcome of October’s elections, Venezuela’s next leader will face growing pressure for private capital to boost the oil sector

By Girish Gupta As Venezuelan bond yields ebb and flow with
the health saga of president Hugo Chávez, who faces his
toughest election yet on October 7, foreign investors are once
again starting to take a closer look at the
country’s oil supplies, the largest in the world.
They are hoping either for a change of government or perhaps a
wave of pragmatism from Chávez. This appears to be in
the offing with the recent announcement of a $2 billion
financing deal between Chevron and state oil firm
Petróleos de Venezuela (PDVSA). Chevron will lend the
company the money at Libor plus 4.5% over 20 years for their
Petroboscan joint venture. The California-based multinational
appears to have placed a bet on Chávez’s
continued presidency of Venezuela and has so far avoided the
expropriations that have blighted operations by competitors
such as ExxonMobil and ConocoPhillips. Chávez in turn
appears uncharacteristically to...